China’s economy becomes a top concern for US companies operating there: survey

China’s macroeconomic problems emerged this year as the No. 2 concern among American companies with business in the country, coming in just behind problems arising from bilateral friction, according to a Washington-based trade association survey released on Friday.

“Weak” domestic demand and “overcapacity” are constraining company profitability in the world’s second largest economy, the US-China Business Council said in a summary of its summer 2024 survey of companies, conducted in June and July.

“China’s macroeconomy”, which did not appear as one of the top 10 challenges in last year’s survey, ranked second behind “US-China relations: geopolitics or domestic politics”, taking the spot that “data, personal information, and cybersecurity rules” occupied a year earlier. The bilateral relations category also topped last year’s list.

“China’s macroeconomy now constitutes a real constraint on business growth, something that was unthinkable only a few years ago,” the association said. “More companies than ever are pessimistic about the medium-term business outlook in China,” the survey summary said.

Economic conditions in China are pressuring profit margins, and about 25 per cent of respondents cited either “insufficient demand” or “overcapacity” as the top constraint on profitability this year, according to the summary.